Md. pension trustees are often absent

Schaefer, Grasmick among those missing many board sessions

$29.5 billion fund

Dixon controls scheduling, nearly always attends

November 18, 2001|By Michael Dresser and Jon Morgan | Michael Dresser and Jon Morgan,SUN STAFF

Maryland Comptroller William Donald Schaefer and three other high-ranking officials on the state's powerful pension board frequently don't show up for its meetings.

Schaefer, state schools Superintendent Nancy S. Grasmick and Col. David B. Mitchell, the state police superintendent, have missed more than 40 percent of the board's monthly meetings since January 1999.

State Budget Secretary T. Eloise Foster also has missed 40 percent of the meetings since she joined the board in June 2000.

The four serve on the 14-member board of trustees that oversees Maryland's $29.5 billion pension system, which lost more than $3 billion last fiscal year. The system covers 300,000 state employees, public school teachers and retirees.

The Maryland system recently finished last in a national ranking of the investment performance of large public pension funds.

Schaefer is the only elected official on the board. He blamed its chairman, state Treasurer Richard N. Dixon, for many of his absences, saying last week that Dixon frequently changed meeting dates for his convenience.

Schaefer also is a member of the board's investment committee. He has failed to attend more than half of those meetings.

He said he had "no excuses" for missing the monthly committee meetings. "I just didn't attend them," he said.

By contrast, Dixon has faithfully attended meetings of both the board and the committee. Dixon has an advantage because, as chairman, he can reschedule board meetings at will.

The meetings missed by Schaefer, Grasmick and Mitchell include one on March 24, 2000, when the pension board made a critical change in the system's investment policy. The decision, which shifted the fund more aggressively into stocks, proved costly when the market began tumbling the next day.

Grasmick missed 18 of 38 board meetings since Jan. 1, 1999, and Mitchell missed 16. Schaefer did not attend 15 of the 37 meetings since he took office later that month. Foster has been absent for eight of 20 board meetings and seven of 16 investment committee meetings since joining the board.

Grasmick said changes in meeting times have frequently created conflicts with her calendar, which she said is set months in advance. She said she does her best within the limits of her "incredible" schedule.

"I don't apologize for my work ethic. It's 14 or 15 hours a day," she said.

A spokesman for Mitchell said that when a matter of public safety comes up, it takes precedence over attendance at the pension board.

Foster did not return a call seeking her comment.

The treasurer, comptroller, budget secretary and the school and police superintendents all serve on the pension board by virtue of the offices they hold.

Employee representatives

The other trustees are elected by plan participants or appointed by the governor. Several of those trustees, all of whom serve without pay, had far better attendance records.

State police Maj. Morris L. Krome missed no meetings. State employee representative Arthur N. Caple Jr., teacher representative Carl D. Lancaster and state police representative G. Bruce Harrison all attended more than 90 percent of board meetings.

One researcher who has studied public pension funds said they often suffer from their reliance on government officials with little time to devote to the task or background in finance. Of the five Maryland trustees with the worst attendance records, four are high state officials.

"The drawback is how much time and effort are they going to put into the position, given what else they have going on?" said John Nofsinger, an assistant professor of finance at Washington State University.

Boards overseeing large pension funds for private corporations tend to be smaller and include people with an interest in the job, he said. Because public pensions are not subject to federal oversight, as their private counterparts are, he said the role of the trustees is even more important.

The composition of Maryland's board is about average for public funds, Nofsinger said. In general, he said, a pension board should have at least half its members elected by the beneficiaries. Six of Maryland's 14 trustees are elected by plan participants.

Goldstein's legacy

Former state Comptroller Robert L. Swann, who was named to the office after the death of Comptroller Louis L. Goldstein in July 1998, said he missed no meetings of the board or the investment committee during his six-month tenure. Swann said he was following in the footsteps of Goldstein, who served as comptroller for 40 years.

"He was very religious about the retirement system and the need to be involved and to attend," said Swann, who worked for Goldstein for 28 years.

Swann said he and Goldstein saw pension board meetings as an important part of the comptroller's job.

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